I've read countless articles about this topic because it stomps on senior water rights holders. What I find really fascinating though is very few articles talk about how this fine is a huge problem for CALPERS. Oh yes it is.
You see, the district which is most affected by this fine is a little city called Mountain House in the East Bay. At one time during the heat of the recession 90% of homes there were underwater. No pun intended. We referred to it as California's ghost city. I blogged about it here. At the time people would report moving vans pulling up in the middle of the night and families would just disappear. I went out there when only 46% of the town was in foreclosure in 2007.

This is the kicker though. Mountain house is owned by CALPERS. Normally this might not be a problem, but apparently Mountain House is only 1/3 built out. And they need to keep building to pay back their bond holders for infrastructure and a water treatment plant. Yet the water district is fining the shit out of them. Which is sort of awkward because the people doing the fine-ing most assuredly belong to CALPERS. I guess people still aren't hip to those pension cuts that a lot of bankrupt States have endured lately.

Naturally I had to go over and see what houses are going for out there now because right before the crash they were selling for around 950,000. The most expensive house I could find was just still shy of 600,000. From time to time I still read that around 15% of homeowners are still underwater and I try to figure out who this demo is. It was a really painful time, so I don't know how many people held out - but apparently that demo is still in Mountain House and is probably owned by the California Public Employees' Retirement System.

This might not be big enough to get your panties in a bunch about except that the general manager of Mountain house said this: “If we’re not growing, we’re dying,” said Pattison, whose district provides water and other services to the unincorporated community. A moratorium on new houses could bring on a “financial death spiral” that would be “more catastrophic than the 2007 crash,” he said. Source.

I hope he means just for that city, but CALPERS has it's tentacles in everything.